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Case Status:    SETTLED
On or around 06/13/2005 (Date of order of final judgment)

Filing Date: June 29, 2001

According to the latest docket, on June 13, 2005, the Court entered the Order by
U.S. District Judge Dickran Tevrizian granting the Class Representatives’ Motion for an Award of Costs and Expenses. The Court awarded $15,000 to David Sinow; $12,500 to Laurence Pilgeram; and $5,000 each to Howard Preston, Langdon Parill, Barrett Anderson, Scott McKenry, Ralph Allman, and Gilbert Kivenson. The Court also approved Plaintiffs’ counsels’ request for reimbursement of expenses of $644,093.94. $10,032 was paid to Miller Milove and Kob. The Court further entered the Final Judgment and Order dismissal and the case was terminated.

On February 4, 2005, the Court entered the Order approving the Notice to the class and setting the final approval hearing. At the hearing, set for May 31, 2005, the Court will determine (a) whether the Settlements are fair, reasonable and adequate, such that an Order of Final Approval should be entered by the Court and a Final Judgment entered upon said Settlements in favor of the Settling Defendants; (b) whether the Class Counsel Fee and Expenses Application should be approved; and (c) whether the Class Plaintiffs Reimbursement Application should be approved.

As part of the settlement, $2 million will be distributed by the Bank of New York to the existing bondholders directly. The claims administrator is the Garden City Group and the claim forms deadline is August 12.

The Motion for preliminary approval of the global settlement was granted on January 31, 2005. The total value of the Settlement with the Settling Defendants is $27,783,000 (the "Gross Settlement Fund"). In addition, if the Miller & Schroeder defendants are successful in their attempt to enforce insurance coverage of the class claims, there is a possibility that an addition $2 million will be added to the Gross Settlement Fund.

The certified Class Action was filed against numerous parties connected to eleven municipal bond offerings in California, Florida, Illinois and Texas that allegedly constituted a huge Ponzi scheme. The bond offerings, which raised over $130,000,000 between December 1996 and March 1999, raised money to be used to acquire, renovate and reopen former hospitals in these four states as facilities designed to assist elderly persons. However, as alleged in this Class Action, due to wrongful disbursements, diversions of bond proceeds and improper commingling of funds, renovations at many of the facilities were not completed. All of the facilities went into receivership or bankruptcy shortly after the bond offerings. The bondholders seek to recover compensatory damages for the loss of value of their bonds.

Due to the fact that a substantial portion of the monies raised in the first few offerings were improperly diverted, monies raised in the latter offerings were improperly used to finish the renovations on earlier facilities. By mid-1999 the underwriter of the offerings refused to conduct any more offerings. Shortly thereafter the Ponzi nature of the scheme came to light and the scheme collapsed.

According to a press release dated May 17, 2005, the Accountant Defendants stipulated to class certification and settled the case for $1.25 million. On May 10, 2004, the Court preliminarily approved the settlement. The monies will go into an escrow fund for the benefit of the bondholders. There are two other proposed settlements currently being documented. Motions for preliminary approval of these two settlements are set for June 14, 2004 and further information will be posted on the case website at by June 1, 2004. At this time, bondholders do not have to take any action to participate. We estimate that notice and a claim form will be sent to the bondholders in October 2004.

Recently, a motion for class certification was filed with the Court. The hearing on the motion is set for July 12, 2004.

This case involves eleven municipal bond offerings in California, Florida, Illinois and Texas, which raised over $130,000,000 between December 1996 and March 1999. The money raised was to be used to acquire, renovate and reopen former hospitals in these four states as facilities designed to assist elderly persons and Alzheimer's patients. Plaintiffs allege that the bond offerings, identified below, constituted a Ponzi scheme. Investigations into the bond offerings were brought on by the SEC and the Department of Justice.

Before the case was certified as a class action, the case proceeded against numerous defendants. Among the defendants were Robert Kasirer and his wife Debra, who contended in filings in the case they were both targets of a Department of Justice investigation. Mr. Kasirer, a Beverly Hills businessman, was involved in bond offerings for many years, and announced a settlement with the Internal Revenue Service relating to actions he took in connection with other bond deals in the early 1990's. U.S. Trust Co., the former trustee and wholly owned subsidiary of Charles Schwab Corp., (NYSE: SCH) was a defendant, as were two wholly owned subsidiaries of Century Business Services Inc. (NASDAQ: CBIZ). The CBIZ subsidiaries, Valuation Counselors Group, Inc. and Zelenkofske, Axelrod & Co., Ltd., prepared appraisals and feasibility studies in each of the 11 bond offerings at issue. Magistrate Judge Rosalyn Chapman granted Plaintiffs' application to deem all of plaintiffs' requests for admissions to Valuation Counselors admitted. The Court's decision is available on Westlaw at 2004 WL 895872. On May 14, 2004, attorneys for Valuation Counselors filed a motion to reconsider this Order. The motion was filed eleven days late under the Local Court Rules. In the motion, Valuation Counselors contended that the forced admissions "eliminates Valuation's viable defense against plaintiffs' negligence claim." Thus, the attorneys for Valuation Counselors themselves contended that, should the District Court refuse to overturn the Magistrate's decision, CBIZ would be held liable for up to $90 million. A review of CBIZ's S.E.C. filings did not reveal any disclosure of this case. Other defendants included the executives of the Heritage organization and the executives of the underwriter for the bonds, Miller & Schroeder Financial Inc. Miller & Schroeder went into Chapter 7 bankruptcy in 2002, in large part due to the Heritage bond debacle. Finally, numerous law firms were sued. The case continued against the Underwriter's counsel on the offerings, Atkinson Andelson Loya Ruud & Romo and Green, deBortnowsky & Quintinella (formerly Sabo & Green). The case against the firms Fulbright & Jaworski LLP, Wildman, Harrold Allen & Dixon and Foley & Lardner were dismissed and appealed.


- Bonds issued by the Danforth Health Facilities Corporation in Texas for Danforth Gardens (December 20, 1996), Sam Houston Gardens (March 3, 1997), and Duval Gardens (July 10, 1998).

- Bonds issued by the Tarrant County Health Facilities Development Corporation in Texas for St. Joseph Gardens (May 15, 1997 and October 5, 1998), Valley Gardens (March 11, 1999), and Eastwood Gardens (November 13, 1998).

- Bonds issued by the City of Mexico Beach, Florida for Heritage House of Sarasota (December 22, 1997) and Heritage House of Seminole (December 21, 1998).

- Bonds issued by the City of Chicago, Illinois for Heritage House of Chicago (July 24, 1998).

- Bonds issued by the Desert Hot Springs Public Financing Authority in California for Heritage Hospital (August 20, 1998).

NOTE: The Bank of New York, Inc. (“BNY”) succeeded U.S. Trust as bond Trustee in November 2001.

Several purported class action lawsuits were filed in state and federal courts with similar allegations. By the Order entered on March 7, 2003, the Court orders that while all of the cases consolidated in the 3rd Amended Consolidated Class Action Complaint CV 02-382 DT (RCx) CV 02-993 DT (RCx) CV 02-6484 DT (RCx) and CV 02-9221 DT (RCx) will remain open, papers will only be docketed under the low numbered case CV 02-382 DT (RCx) and the MDL Docket No. 1475. Documents filed in regards to the Class Action should relate only to 02-382 DT (RCx).

The first filed complaint, Betker Partners One LP, et al v. U.S. Trust Company, et al., is not part of the consolidated class action and has continued as an individual action.


Sector: Financial
Industry: Investment Services
Headquarters: United States


Ticker Symbol:
Company Market: Privately Traded
Market Status: Privately Held

About the Company & Securities Data

"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: C.D. California
DOCKET #: 01-CV-5752
JUDGE: Hon. Dickran Tevrizian
DATE FILED: 06/29/2001
CLASS PERIOD END: 09/07/1999
  1. Brian Barry
    1801 Avenue of the Stars, Suite 307 , Brian Barry, CA 90067
    310.788.0831 310.788.0841 ·
  2. Feldhake August & Roquemore
    Newport Gateway Tower 2, 19900 MacArthur Blvd, Ste 850, Feldhake August & Roquemore, CA 92612
    949.553.5000 ·
No Document Title Filing Date
COURT: C.D. California
DOCKET #: 02-CV-00382
JUDGE: Hon. Dickran Tevrizian
DATE FILED: 12/06/2004
CLASS PERIOD END: 09/07/1999
  1. Blaies & Hightower LLP
    777 Main Street, Suit 1900, Blaies & Hightower LLP, TX 76102
    817.334.0800 817.334.0574 ·
  2. Brian Barry
    1801 Avenue of the Stars, Suite 307 , Brian Barry, CA 90067
    310.788.0831 310.788.0841 ·
  3. Cohen, Milstein, Hausfeld & Toll, P.L.L.C. (Washington, DC)
    1100 New York Avenue, N.W., Suite 500, West Tower, Cohen, Milstein, Hausfeld & Toll, P.L.L.C. (Washington, DC), DC 20005
    202.408.4600 202.408.4699 ·
  4. Glancy Binkow & GoldBerg LLP
    1925 Century Park East, Suite 2100, Glancy Binkow & GoldBerg LLP, CA 90067
    310-201-9150 ·
  5. Glancy Binkow & Goldberg LLP (Los Angeles)
    1801 Ave. of the Stars, Suite 311, Glancy Binkow & Goldberg LLP (Los Angeles), CA 90067
    310.201.915 310. 201-916 ·
No Document Title Filing Date
No Document Title Filing Date